7 Important Investor Financing Tips
1. Know your financing options. Different lenders have different products as well as rates. A mortgage agent will find you the best product and rate.
2. Don’t confuse an appraisal with a home inspection – you need both! An appraisal determines the worth of the property by estimating the market value of the land and building. A home inspection inspects the adequacy and condition of the building and all major systems.
3. Place conditions on your offer. Conditions provide you with the flexibility of withdrawing your offer if you are unable to obtain the necessary financing, or if the inspection reveals structural problems with the property. Even with pre-approval, Investors who make an offer without conditions do so at their own risk.
4. Understand closing costs. When buying a home, it pays to be informed about closing costs, which can represent up to three per cent of the purchase price, including: land transfer tax, lawyer’s fees, appraisal fees, title insurance and home inspection fees.
5. Have a firm strategy for a bidding war. In a competitive market, it is not uncommon for vendors to hold offers off until a particular date. This means you could be bidding for a property along with several other parties. It’s easy to get caught up in the emotion of the bidding war, so know your maximum price before you bid and stick to it!
6. Don’t do it alone – explore the benefits offered by mortgage brokers. Mortgage brokers act as a one-stop shop for planning advice and the best rates
7. Lock-in a mortgage rate before you begin shopping for a home. Most financial institutions will lock-in a rate for up to 120 days when pre-approving potential borrowers for a mortgage. Remember to renew the 120-day period if mortgage rates fall during this time.